Stocks Rally as Interest Rates Drop; Dow Up 5

The stock market halted the slide of the past two sessions with a moderate rally Wednesday, aided by declining interest rates.

The Dow Jones average of 30 industrials, which had tumbled a total of 80.14 points on Monday and Tuesday, rose 5.34 to 1,826.07.

Volume on the New York Stock Exchange came to 142.88 million shares, down from 174.06 million the day before.

Early in the session and again near the close, stocks benefited from flurries of buying by traders apparently shopping for “bargains” after the market’s sharp drop since the start of the week.

But analysts said the stock market was still feeling the effects of the jolt of Monday’s record-setting drop and further selling on Tuesday.

Furthermore, they said, concern persisted over slower-than-expected economic growth. Second-quarter earnings reports issued by corporations over the next few weeks are expected to reflect that general sluggishness.

Safeway Tops List

Safeway Stores led the active list and jumped 4 5/8 to 58 1/8. Dart Group announced a $58-a-share tender offer for the company’s stock.

American Brands, the subject of recurring takeover rumors and speculation, climbed 8 to 102 1/2.

Bernard Chaus Inc., in its first day of trading on the Big Board, stood at 23 after the company, which designs and markets women’s apparel, went public at $17 a share.

An enthusiastic reception for a new issue like that was seen as a plus for Wall Street after the market’s recent woes.

Pharmaceutical issues posted broad gains. Upjohn rose 3 5/8 to 90, Warner-Lambert 1 5/8 to 59 3/4, Pfizer 2 to 68 5/8, Smithkline Beckman 7/8 to 97 3/8 and Eli Lilly 5/8 to 77 1/2.

Sears, Roebuck dropped 3/4 to 44. Sears said it planned to file for regulatory approval of a public offering of as many as 10 million shares.

In the overall count on the Big Board, advancing issues outnumbered declines by nearly two to one. Large blocks of 10,000 or more shares traded on the NYSE totaled 2,885, compared to 3,110 on Wednesday.

Bond Prices Climb

Bond prices jumped, erasing declines of the previous session in a comeback that analysts ascribed to the renewed speculation that the government will stimulate the economy by quickly easing credit conditions.

The Treasury Department’s key 30-year bond rose more than $10 per each $1,000 in face amount, and its yield fell to 7.14% from 7.23% late Tuesday. Shorter-term interest rates dropped sharply.

In the secondary market for Treasury bonds, prices of short-term governments rose 5/8 point, intermediate maturities rose 1 1/8 point and long-term issues rose 1 1/8 point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In corporate trading, industrials and utilities rose 1/2 point in moderate dealings. Among tax-exempt municipal bonds, general obligations fell 3/4 point and revenue bonds rose 3/4 point. Trading was moderate.